Conditions 'perfect' for Aussie shares

The decreasing value of the Australian dollar, low inflation and steady interest rates will pave the way for investment opportunities in 2015, says Middletons Securities.

In its investment outlook for 2015, financial planning firm Middletons Securities spokesperson Lachlan McQueen said it has maintained a similar outlook to 2014.

“[We expect] that the value of our dollar will fall, inflation will remain low for now, and interest rates will stay steady – creating perfect conditions for investing in shares and property,” Mr McQueen said.

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Mr McQueen also pointed out the two factors that would determine investor outcomes in 2015: a change in the underlying value of investments and changes in the price that’s paid for that value.

“While the factors that ultimately determine an underlying value and the valuation multiples are complicated and often interrelated, our approach is to look at major factors that are likely to define the investment experience for the year to come.

“Reasonable, if unspectacular, economic growth nationally and overseas, combined with low inflation and interest rates will be good for underlying investment value and support profit and wage growth.

“While a lower Australian dollar will increase the value of international investments for Australians," Mr McQueen said.

The firm’s outlook also identified inflation and interest rates as “looming issues” that need to be closely watched.

“Middletons Securities isn’t a lone voice when it comes to being worried about future inflation and interest rates, but at this point in time more people seem to be focused on the possibility of deflation,” Mr McQueen said.

“There is certainly a possibility of an inflation blowout if the efforts to stave off deflation go too far.

“If inflation gets away and interest rates rise significantly then economic growth will struggle and investment value will see major falls – so investors need to keep that in mind and factor that into their investment strategies,” he said.